Cabinet Sub-Committee to study implications of gold tax | Sunday Observer

Cabinet Sub-Committee to study implications of gold tax

PIX: LAKE HOUSE MEDIA LIBRARY
PIX: LAKE HOUSE MEDIA LIBRARY

The Cabinet Sub Committee appointed to look into the possibility of removing the 14.5 percent tax imposed under the new Inland Revenue Act, will hold discussions this week to ascertain whether an exception could be given to the country’s gem and jewellery industry.

“On the directions of the Environment Ministry, a Cabinet paper has been submitted to remove the additional tax component and a Cabinet Sub Committee was appointed to study the matter,” National Gem and Jewellery Authority (NGJA) Director General M.L. Gammanpila told Sunday Observer Business.

“The committee will meet this week to discuss the possibility of providing relief to the industry,” he said.

The NGJA which has the responsibility of inspecting standard of the gold is of the view that high price will lead to quality issues.

“The Authority which hallmarks gold at the Sri Lanka Assay Office, is concerned about the increase in prices as quality could drop due to high cost.

Therefore, it is important to provide the industry with a tax exception to maintain price stability and quality which the country has a reputation for,” he said.

This will also help to reduce gold smuggling and the industry to be more competitive in the local and global markets. It is necessary to provide customers with reasonable price as gold is a commodity people accumulate over time, he said.

“In a scenario where the local gold and jewellery prices are high, there is a tendency to import these products which will be a drain on valuable foreign exchange. There will also be cheap products in the market to match the affordability of customers. We hope that the government will take into consideration all these facts and exempt the gem and jewellery industry from the new tax,” he said.

The government recently imposed a 15 percent tax on gold imports and this also has adversely affected the industry.

The gem and jewellery industry will be subjected to tax under the new Inland Revenue Act and it will lose the benefit it enjoyed over the years. The new tax applies across the board and a single industry cannot be exempted from this tax, a Finance Ministry official said.

“The Ministry is unable to give special treatment to one particular industry,” he said. “Gold prices fluctuate globally and this happens on a daily basis. This commodity could not be treated as an investment as it does not give a return. However, people buy gold as a future saving as it has a high value. Sri Lankans invest in gold as it can be converted to cash easily when needed,” Financial Analyst Ravi Abeysuriya said. 

Comments

GOLD IS AN INVESTMENT, GOVERNMENTS ENCOURAGE INVESTMENTS,IF SO GOLD IS NOT A TAXABLE COMMODITY.

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